NetAction Notes

Published by NetAction Issue No. 53 December 27, 1999
Repost where appropriate. See copyright information at end of message.


Elementary E-Philanthropy
About NetAction Notes

Editor's Note:

This issue of NetAction Notes was written by Michael Stein, who may be familiar to readers as co-author of the Virtual Activist, NetAction's online training course on Internet advocacy. (Michael's bio is included below.)

We are pleased that Michael has agreed to contribute to the newsletter, and to answer readers' questions about nonprofits online. Readers are invited to send questions to . Questions of general interest will be answered in future issues of the newsletter.

Elementary E-Philanthropy

By Michael Stein

Because it's the holiday season and the buzz these days among nonprofits online is e-philanthropy, I've dedicated all the content below to covering this issue. I get a lot of questions emailed to me on this topic, so I've structured it as a series of FAQs (Frequently Asked Questions).

QUESTION: My nonprofit has been receiving phone calls and emails from a number of different companies that propose to help us fundraise on the Internet. What's the difference between all these companies?

ANSWER: These companies tend to fall into three categories. The FIRST category are the "charity portals," Web sites that offer a directory of nonprofits, of which you'd be one of many. Their job is to attract lots of traffic to their site, and encourage visitors to make contributions to the nonprofits listed. Often your listing is free, and the portal accepts secure credit card contributions on your behalf. Some charge a fee when you get a contribution. These portals make their money either from advertizing on their site or through the fees they charge the nonprofit. Examples include and The SECOND category are the "payment service providers," that specialize in setting up secure credit card systems for nonprofits. They make their money through a fee structure based on the contributions you receive. The nonprofit puts a button on its site so that when a visitor is ready to give, they get switched over for the transaction to take place. Examples include and The THIRD category are "e-commerce commission portals" where you actively encourage your members to do their e-commerce shopping through a portal, and a percentage of the purchases goes to the nonprofit of your choice. Examples include,,

An excellent inventory that lists all the known companies in this field is maintained by Putnam Barber, Editor, The Internet Nonprofit Center at (See also: "Profiting from Nonprofits," in NetAction Notes No. 51.)

QUESTION: I hear a lot of news about as a free service to accept online donations offered by AOL. What do you think about

ANSWER: I think that the AOL Foundation and are doing a great job of bringing electronic philanthropy into the mainstream of the Internet and helping small nonprofits obtain online fundraising in an easy and affordable manner. We all know that online fundraising for nonprofits still has a long way to go before it makes a dent in revenue projections. We can safely assume (just like with e-commerce) that people will eventually become more familiar and comfortable making donations online. This change in attitudes will benefit everyone who is using the Internet to fundraise.

QUESTION: How do I choose between the various services to find the right solution for my nonprofit?

ANSWER: Let me paraphrase an answer from Kurt Hansen, the CEO and Founder of, from a post he made recently on a listserv devoted to online fundraising. He suggested that if you're a nonprofit charity with less than a $2 million annual budget or with little traffic through your Web site, then you should probably use or a similar charity portal. It's probably not worth the investment of time and energy to do it any other way. If you get a surge of donations or you want to add a shopping cart, then you can look for a more custom alternative. Charities with more than a $2 million budget, with lots of traffic through their site, or who want to sell things from their site should look at a custom solution with one of the payment service providers.

QUESTION: What questions should I ask an online fundraising service that wants me to sign up with them?

ANSWER: Get all the information you can about how their service works. Examine their Web site in complete detail to see how they present their service, and how they feature the nonprofits that are signed up with them. Make sure you have a very good understanding of what fees you might have to pay when you receive a donation, or any signup or monthly fees. Don't get forced into signing a multi-year contract if you're not comfortable with that. Tell the service that you want a shorter contract so you can evaluate the effectiveness of their service. Get referrals from other nonprofits that have signed up, and try to find out how much money they've raised through the service. Ask about how the service promotes itself through marketing and advertizing. You want to know how hard they're working on your behalf. And finally, make sure you understand what the service requires YOU to do as part of the deal. Some ask for buttons on your home page or announcements in your email newsletters.

QUESTION: Where can I learn more and follow developments in this field?

ANSWER: I highly recommend the Online Fundraising Mailing List offered by Michael Gilbert of The Gilbert Center in Seattle. To subscribe to the Online Fundraising Mailing list, send email to (from the address at which you wish to be subscribed) with the words subscribe fundraising in the body of the message. To learn more about The Gilbert Center visit

Got a question about nonprofits online? Ask Michael: Send your questions to Michael Stein at . Questions of general interest will be answered in a future issue of NetAction Notes.

Michael Stein is a Internet strategist with a decade of experience working with advocacy groups, non profits and labor unions. He is the author of two books about the Internet including "Fundraising on the Internet: Recruiting and Renewing Donors Online," with Mal Warwick and Nick Allen (Strathmoor Press, 1997). He is currently the Manager of Internet Presence at the Support Center for Nonprofit Management in San Francisco, and a consultant with Resourceful Internet Solutions, an Internet consulting firm serving mediators, nonprofits and unions. Recent Internet projects have included the California Labor Federation, Children Now, Environmental Defense Fund, SEIU California State Council, Landmark Education, Independent Media Institute, Women's Economic Agenda Project and Peninsula Open Space Trust. He is a frequent advisor and lecturer on Internet strategy to nonprofits nationwide, and has been featured in The Chronicle of Philanthropy and The Industry Standard. He can be reached at .

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